Do you want to launch a profitable side hustle on Amazon? Read the post below to find out the three Amazon side hustles you can opt for. Also read their pros and cons, which will help you in decision-making in this regard.
However, first of all, you need to clear a few facts. So, do you assume that you can not succeed on Amazon if you DO NOT run a FULL-TIME business? Your assumption is WRONG.
According to research:
- 54% of the Amazon sellers do additional work other than their Amazon businesses.
- 37% of the Amazon sellers are on full-time jobs. (40+ working-hours/week).
- 21% of the Amazon sellers earn income from Amazon sales only.
Source: The state of the Amazon Seller in 2002
Choosing the right business model for your Amazon side hustle is very important. So you have to consider the following three factors to know which model fits best for you:
- Goal
- The goal of your side hustle.
- Choose either to opt for a second income or long-term business.
- Cost and Time
- Know your investments.
- Analyze the amount of time and money you have for the business upfront.
- Effort
- State the commitment to your business.
- How much weekly effort you can put in.
So, in this post, we will evaluate each business model based upon the following criteria.
- Desired outcome
- Starting costs
- Upfront work
- Ongoing management
Now let’s learn the 3 types of business models of Amazon’s side hustle along with their pros and cons that will help you decide which one fits best for your business.
1- The Retail Arbitrage Amazon Side Hustle
2- The Wholesale Amazon Side Hustle
3- The Private Label Amazon side hustle
1- The Retail Arbitrage Amazon Side Hustle
Retail arbitrage is one of the widely used online side hustles. This model of this side hustle refers to buying the products that are on sale in stores and resell them online to earn a profit.
Sellers opting for a retail arbitrage journey, spend most of their time exploring physical outlets. They keep looking for deals or sales that can help them in earning profit.
As per the research, 20% of Amazon sellers use the retail arbitrage model.
Pros of Retail Arbitrage
The advantages of retail Arbitrage are:
- Easier to start
- There are no hard and fast rules to use this model. No eligibility criteria are there to opt for this model. You don’t need your own brand as you only resell the products of other brands. Moreover, pre-occupied larger storage space is not needed as you know how many products you’re collecting.
- You can use Stock Konnect and utilize its efficient inventory management tool if you opt for this model as your long-term business.
- You may outsource the management of shipping with Fulfillment by Amazon (FBA).
- Low-cost investment
- Excluding the Amazon seller fees and shipping, there are only two costs you are paying for. One is your inventory cost – that is how many items you’re buying. And the other is the cost needed for the packaging and fuel required for reselling.
- You can start making profits by reselling a few items in the beginning, then gradually extend your level.
- Quick-to-earn profits
- You are not bound to invest a larger cost to buy bulk products at a time that might take time to turn into profit.
- An arbitrage model provides you with the flexibility to pick up the market trends and then translate them into quick profits.
Cons of Retail Arbitrage
The main factors that can make retail arbitrage unreliable are:
- Time-consuming
- Buying products is highly time-consuming with retail arbitrage. You have to keep visiting the physical outlets and find out the deals or sales on their products. The traveling time is also a big factor that is incorporated in this con.
- Ambiguous business control
- You’re unaware on every trip if you’ll get low-priced products of good quality or not.
- You can’t foretell on what products the discount will be applied. Sometimes, sales are not on the profitable and potential items.
- High competition
- The competition in the world of ‘reselling’ is very high. When you sell the same product as someone else, especially when you share your product listing on Amazon. You have to follow some tips to compete and win the game on Amazon.
- Don’t worry if the situation arises where you have to compete with the original brand. You already know that it’s only the price that can get you a win or lose. So it’s suggested to define your price thresholds accordingly.
Keys to Success with Retail Arbitrage
The keys to success with retail arbitrage are:
- Do brainstorming if you plan to run your side hustle like a professional business.
- Follow the ongoing trends of purchases. Then wait for the sales or deals on them.
- Track business expenses. Plan budget – calculate your fuel and packaging expenses.
- Keep monitoring revenue, profits, and budget.
2- The Wholesome Amazon Side Hustle
Wholesome Amazon is also one of the most-used online side hustles. This model of this side hustle includes buying the bulk items from a manufacturer or wholesaler and reselling them online on Amazon.
This side hustle is almost similar to retail arbitrage. The only difference that separates the two is you purchase a larger stock of products from authorized distributors. Thus, the consistent insourcing of stock will let you drive more consistent sales.
The root that must be examined is the quality of the products you’re buying. Thus, the reliability and reputation as a seller depend upon the node you’re collecting products from.
The following are the vital factors needed to be considered for this Amazon side hustle:
- Planning your budget.
- Finding the trending products of the time.
- Finding a wholesale distributor or manufacturer who is capable of providing those quality products timely.
- Establishing a strong relationship with that manufacturer/distributor.
The wholesale model is the second most popular model on the marketplace; as per research, 26% percent of Amazon sellers use this side hustle.
Pros of wholesale selling
Following are a few key factors that can be achieved when opting for a wholesale model.
- Dynamic product sourcing
- The wholesale model lets you have a greater opportunity to research and pick your products than the retail arbitrage. Thus, you can carry out thorough research to find the products that you should sell on Amazon. This is how you have the opportunity of dynamic product sourcing.
- Scalability and profitability
- Having larger inventory lets you analyze products in advance. Therefore, it’s easier to scale your business over time. Thus, generate profits along the time.
- Secure reselling
- Secure reselling is achieved when you buy products from authorized suppliers or manufacturers. Such manufacturers usually ensure product authenticity by providing product documents along. This lets you protect yourself against counterfeit claims.
Cons of wholesale selling
The factors responsible for the wholesale model’s unreliability are:
- Risk of failing product reselling
- If you do not carry out proper research to find the best products to sell, you’ll end up having bulk products that are not in trend. Thus, you will fail to resell those products. Therefore, it is important to strengthen your research.
- The higher initial amount to invest
- You can not start with little investment in inventory. As you have to buy a lot of products at a time from the supplier, so you need to have a good initial amount to invest.
- Difficult to find a good supplier
- This model depends upon your supplier basically. Your supplier can either scale your business up or bring it down. Finding a reliable supplier with affordable and high-quality products can be quite challenging.
- Tough competition
- As many sellers are opting for this model, there are chances that you will have a lot of competitors selling the same products. So you need to come up with some strategies that will help you stand out. In other words, the customer should stay longer on your product page and help you make a profit.
3- The Private Label Amazon Side Hustle
The Private Label side hustle on Amazon is almost similar to the wholesale one. The difference that separates the two is, you sell a product with your own private label or brand instead of selling another manufacturer’s products.
You can opt for either of the two options for this model:
- Manufacture a new product.
- Add your private label to generic products
There are many private-label sellers who buy general items from wholesalers. Some of them don’t even add a brand label to the product.
You can follow the following steps to sell your manufactured products.
- Design or plan your products or customize other’s products to make them unique.
- Outsource their production (if you do not have enough in-house resources.)
- Add your private label.
- Sell it on Amazon.
As per research, 71% of Amazon sellers are selling via the private label model.
Pros of private label selling
Comparing the ‘reselling’ factors, the cons of ‘selling’ with the private label model are stated below.
- Greater profit margins
- Experience higher profit margins with lower selling competition. Furthermore, as you’re buying affordable products or manufacturing your own at reasonable rates, you tend to have greater savings when sales are made.
- Lower selling competition
- For you are selling customized or unique products, so you no longer need to win the Amazon Buy Box. Therefore, you have many other choices to compete on rather than just price.
- Better business control
- Unlike both the retail arbitrage and wholesale model, you are not at the mercy of someone else’s brands. With others’ brands, you are bound to customize the listing options. With your brand, you can control all aspects of the product on Amazon. Ultimately, the control provided by this model lets you enhance your business far more productively than other models.
Cons of private label selling
Following are the downsides of selling with private label
- Capital investment
- Wholesale requires investment only in inventory upfront. But private label expects you to have a high investment. There are many factors where you have to pay investments like product sourcing, brand logo designing, product packaging, cost of brand management resources, etc.
- Time-consuming
- Time is the key. As you have the above-mentioned responsibilities to perform, you need to have a lot of time to plan their execution.
- Hard to find a reliable supplier
- If you’re rebranding the generic products, then your business depends upon your supplier. Thus, reliable suppliers are a very important factor. They can either make or break your reputation. Hence, proper vendor research is very important.
- Protecting brand reputation
- You have to protect your brand reputation very carefully. Too many generic wholesalers often sell cheap products. They make these products easy to label. Yet this ease brings a problem – damages your brand reputation for low quality.
- Slower output
- Being a newbie hits slower profitability as compared to the existing renowned brands. New brands also grow over time, but slowly.
Analyze, choose, and execute!
While analyzing the right Amazon side hustle for your business, you need to see consequences. Involve your brain enough to analyze the pros and cons. And, listen to your heart to sustain your jump into the risks; as ‘the greater the risk, the greater the reward’.
So, start your research. Develop a business plan. Plan your time and budget. Focus on your goals. Face the challenges ahead. Manipulate strategies timely. And go on to keep hustling to keep succeeding.
Stop here! We are not bringing just this blog for your understanding but also a solution that will help you master the Amazon marketplace with easy listing and inventory management. Try Srock Konnect today and reach your goals.
